China's National Bureau of Statistics reported that the Consumer Price Index (CPI) rose 0.9% year-over-year in September, up from 0.8% in August but below the market consensus of 1.0% [1][2][4]. On a month-over-month basis, CPI increased by 0.2%, softer than the previous 0.4% and missing expectations of 0.3% [2][4]. Meanwhile, China's Producer Price Index (PPI) surged 5.0% year-over-year in September, accelerating from August's 3.8% and beating market expectations of 4.5% [1][2][4].
The release of this data had a modest but positive impact on commodity-linked currencies. The Australian Dollar (AUD) held gains, with AUD/USD trading around 0.6990, and the New Zealand Dollar (NZD) also clung to gains near 0.5620 against the US Dollar (USD) [1][2][4]. The British Pound (GBP) strengthened above 1.3250, supported by a softer USD following dovish remarks from New York Federal Reserve President John Williams, who stated that while one more rate hike may be appropriate this year, he does not foresee additional hikes in 2027 [2][3]. Market participants are now focused on the upcoming US September CPI inflation data, expected to show a year-over-year rise of 3.6%, up from 3.4% in August, and a core CPI increase to 2.5% from 2.4% [2][3][5].
In the Japanese market, the Yen softened as expectations for an October Bank of Japan (BoJ) rate hike faded, with USD/JPY trading near the mid-158.00s. The pair remains range-bound as traders await US inflation data and Fed Chair Kevin Warsh's speech at the IMF and World Bank meetings in Bangkok [5]. Market pricing indicates a roughly 90% chance of a US rate hike in December, while persistent geopolitical risks in the Middle East continue to support the USD [1][5].
Analysts at Scotiabank and ING highlighted the potential for increased market volatility around the IMF meetings and upcoming fiscal events, with Scotiabank warning of headline risk as policymakers assess tightening in the face of elevated oil prices and broadening inflationary pressures [2][3]. ING analysts noted that the UK policy backdrop remains supportive for GBP, though the upcoming UK budget on October 28 could pose risks [3].
Technical analysis for NZD/USD and USD/JPY suggests that both pairs are at key resistance levels, with further gains dependent on clearing these barriers. For NZD/USD, a move above 0.5630-0.5635 could open the way for more upside, while USD/JPY needs to break above 158.75 for additional gains [1][5].
CONCLUSION
China's inflation data came in mixed, with CPI below expectations but PPI beating forecasts, providing modest support to the AUD and NZD. Market attention now turns to the US CPI release and key central bank communications, which are expected to set the tone for currency markets in the near term. Volatility may increase around upcoming IMF meetings and fiscal events, especially as traders reassess global monetary policy paths.